Columbia, SC, October 20, 2005 -- South Carolina Electric & Gas Company (SCE&G), principal subsidiary of SCANA Corporation (NYSE: SCG), announced today that it has entered into a settlement agreement with the Office of Regulatory Staff and the South Carolina Energy Users Committee, a consortium of large industrial customers, relating to the annual review of the purchased gas adjustment (PGA) component of the company's retail natural gas rates. The annual PGA review allows SCE&G to pass through to customers increases or decreases in the cost of natural gas. SCE&G does not profit from such adjustments.
The Public Service Commission of South Carolina (PSC) held a hearing today on the company's PGA request and the proposed settlement agreement. A final decision by the PSC is expected by the end of October 2005.
In September 2005, SCE&G filed for an increase in the PGA component of its retail natural gas rates to offset the recent record increases in the price of wholesale natural gas, attributable in part to supply disruptions caused by Hurricanes Katrina and Rita this summer. That request, which included an increase of approximately 55.5 percent in the PGA component of residential rates, reflected recovery of an estimated $14 million in under-collected gas costs during the 12-month period ending October 31, 2005 as well as projected gas costs over the succeeding 12-month period through October 31, 2006.
In an effort to help its customers deal with the unprecedented increases in natural gas prices, SCE&G has agreed, as part of the proposed settlement agreement, to defer collection of these under-collected expenses and to implement additional cost-saving measures as highlighted below:
(1) SCE&G will defer, for one year, recovery of the $14 million in under-collected gas costs incurred in purchasing natural gas for its customers over the past 12 months. That amount would be subject to collection beginning November 1, 2006.
(2) The settlement agreement stipulates that the cost-of-gas factor to be applied to customer bills for the 12-month period beginning Nov. 1, 2005 will be based on projected natural gas costs over a 24-month period rather than the 12-month forecast period typically used in PGA proceedings. This change lowers the cost-of-gas factor and is projected to increase the under-collection of gas costs during the 12-month forecast period by approximately $7 million.
(3) SCE&G will not accrue interest on the under-collected amounts through October 31, 2006. After that date, interest will accrue monthly on the under-collected balance until the projected $21 million in under-collected gas costs is fully recovered.
(4) To help ensure that the under-collection does not exceed that $21 million mark by the end of the 12-month forecast period, the settlement agreement allows SCE&G to adjust its cost-of-gas factor on a monthly basis beginning in December 2005. That change will allow the company to keep pace with further increases in the wholesale cost of natural gas.
In its original filing, SCE&G had asked the PSC to raise the PGA component of residential rates from approximately $.90 per therm to about $1.40 per therm, or about 55.5 percent, effective in November 2005. The settlement agreement, which is subject to review and approval by the PSC, reduces the requested increase in the PGA component of residential rates by approximately 21 percent, or 11 cents per therm.
"Given the extreme volatility we continue to experience in wholesale natural gas markets, we believe this settlement agreement fairly balances the interests of both the company and its natural gas customers," said Kevin Marsh, senior vice president and chief financial officer. "Deferring the collection of a portion of our total natural gas costs will help our customers deal with significantly higher bills that are likely during the coming winter months."
SCE&G is a subsidiary of SCANA Corporation, a Fortune 500 company headquartered in Columbia, SC. SCANA is an energy-based holding company principally engaged, through subsidiaries, in electric and natural gas utility operations and other energy-related businesses. Information about SCANA and its businesses is available on the Company's Web site at www.scana.com
SAFE HARBOR STATEMENT
Statements included in this press release which are not statements of historical fact are intended to be, and are hereby identified as, "forward-looking statements" for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned that any such forward looking statements are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those indicated by such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, the following: (1) that the information is of a preliminary nature and may be subject to further and/or continuing review and adjustment, (2) regulatory actions or changes in the utility and nonutility regulatory environment, (3) current and future litigation, (4) changes in the economy, especially in areas served by the Company's subsidiaries, (5) the impact of competition from other energy suppliers, including competition from alternate fuels in industrial interruptible markets, (6) growth opportunities for the Company's regulated and diversified subsidiaries, (7) the results of financing efforts, (8) changes in the Company's accounting policies, (9) weather conditions, especially in areas served by the Company's subsidiaries, (10) performance of the Company's pension plan assets, (11) inflation, (12) changes in environmental regulations, (13) volatility in commodity natural gas markets and (14) the other risks and uncertainties described from time to time in the Company's periodic reports filed with the United States Securities and Exchange Commission. The Company disclaims any obligation to update any forward-looking statements.